Silver Upside Continues After Weak Initial Jobless Claims Release
Silver managed to stay above the $14.00 support level and continues its upside move. The U.S. Initial Jobless Claims have just been released and showed that roughly 3.3 million Americans applied for unemployment benefits.
The markets have been undecided on how to react to this number, but the U.S. dollar continued its downside move – the U.S. Dollar Index has just breached the important 100 level.
The weakness in the U.S. dollar helps silver to continue its upside move. In addition, the release of the Initial Jobless Claims did not lead to any material market sell-off, so the risk appetite is still present in the markets, which is bullish for silver.
Gold continues to struggle with the $1700 level and remains in a wide range between $1600 and $1700 per ounce. If gold gains momentum, it will also help silver show more robust dynamics.
The Initial Jobless Claims release presented a major risk for the current upside trend in silver since it could have caused a major sell-off. While the reported number is the worst in history, it looks like the market was psychologically prepared for it and continues to expect positive effects from the Fed’s quantitative easing program and the $2 trillion U.S. coronavirus aid package.
Despite this optimism, silver traders will have to carefully watch the direction of other asset classes since the positive mood may quickly evaporate as the current economic situation is bad, and the next week’s numbers could be even worse.
Silver continues its upside move and the next target is the resistance at the 20 EMA at $14.90. In case silver is able to gain a foothold above 20 EMA, it will have a chance to complete a full rebound to pre-crisis levels, closer to the 50 EMA.
To do this, silver should first stay above the $14.00 support level, which has already been tested and showed its strength. If silver falls below this level, it will likely decline closer to the $13.30 level.
At this point, silver is enjoying tailwinds from weaker U.S. dollar, stronger gold and the optimistic stock market. If these catalysts stay intact, there will be more room for silver upside.